U.S. SECURITIES AND EXCHANGE COMMISSION
                                              Washington, D.C. 20549

                                                    FORM 10-QSB

(Mark One)

         [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended:  June 30, 1998

                                                        or

         [  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________________ to ____________________

Commission File Number:  33-89966

                            TREMONT ADVISERS, INC.
          (Exact name of small business issuer as specified in its charter)
   Delaware                                             
(State or other jurisdiction                     06-1210532
 or incorporation or organization)   (I.R.S. Employer Identification No)

                       555 Theodore Fremd Avenue, Rye, New York 10580
                   (Address of principal executive offices) (Zip Code)

                              (914) 925-1140
                         (Issuer's telephone number)


        (Former name, former address and former fiscal year,
              if changed since last report)

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter  period) that the issuer was required to file such reports,  and (2) has
been subject to such filing requirements for the past 90 days.
         Yes   X                    No

       APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE
                                PRECEDING FIVE YEARS

         Check whether the issuer filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the  distribution of
securities under a plan confirmed by a court.
         Yes                        No

                                       APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares outstanding of the Registrant's Class A Common Stock, $0.01
par value,  as of the close of business on July 31, 1998 was 1,284,718,  and the
number of shares outstanding of the Registrant's Class B Common Stock, $0.01 par
value, was 2,804,604 as of the same date.


                                               

<PAGE>



                                                       INDEX
<TABLE>

                                              Tremont Advisers, Inc.
<S>                                                                                                       <C>

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements. (Unaudited)                                                                Page

    Condensed Consolidated Balance Sheets - June 30, 1998 (unaudited)                                       1
       and December 31, 1997 (audited)

    Condensed Consolidated Statements of Income -
       six and three months ended June 30, 1998 and 1997                                                    2

    Condensed Consolidated Statements of Cash Flows -
       six and three months ended June 30, 1998 and 1997                                                    3

    Notes to Condensed Consolidated Financial Statements                                                    4


Item 2.  Management's Discussion and Analysis                                                              14



PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                                                 14

Item 4.  Submission of Matters to a Vote of Security Holders                                               14

Item 6.  Exhibits and Reports on Form 8-K                                                                  14

SIGNATURE                                                                                                  15

Exhibit 27.  Financial Data Schedule                                                                       16





                                                
</TABLE>

<PAGE>



                                          PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

                                              Tremont Advisers, Inc.

                                       Condensed Consolidated Balance Sheets

<TABLE>
<S>                                                                               <C>                       <C>   
  
                                                                              June 30              December 31
                                                                                 1998                   1997
                                                                              (Unaudited)             (Audited)
Assets
Current Assets
Cash and cash equivalents                                                     $ 914,214                 $  820,801
   Accounts receivable, less allowances for
      bad debts of $35,000 and $25,000 respectively                           2,496,499                  2,011,445
   Receivable from officer                                                          ---                    200,000
   Prepaid expenses and other                                                   108,106                    123,103
                                                                               --------                   --------
Total current assets                                                          3,518,819                  3,155,349

Investments in limited partnerships (Cost--$908,467 and $803,467)             1,477,956                  1,221,487
Investments in joint ventures (Cost--$532,667 and $371,667)                     125,184                     99,345
Other investments (Cost--$86,000)                                                68,151                     75,420

Fixed assets, net                                                               364,891                    401,153

Other assets                                                                     28,958                     28,958
                                                                                -------                   -------
Total assets                                                                 $5,583,959                 $4,981,712
                                                                             ==========                 ==========


Liabilities and shareholders' equity
Current liabilities
   Accounts payable                                                            $ 37,797                   $ 50,490
   Accrued expenses                                                             830,221                  1,112,734
   Income taxes payable                                                          17,823                      1,143
   Deferred income taxes payable                                                171,500                    171,500
                                                                               --------                   --------
Total current liabilities                                                     1,057,341                  1,335,867

Deferred income taxes payable                                                   230,671                    160,600

Shareholders' equity
   Preferred Stock $1 par value, 350,000 shares
     authorized, issued and outstanding - none                                   ---                         ---
   Class A Common Stock, $0.01 par value, 5,000,000 shares
     authorized, 1,284,718 shares issued and outstanding                        12,847                      12,847
   Class B Common Stock, $0.01 par value, 5,000,000 shares
     authorized, 2,804,604 and 2,802,104 shares issued and
     outstanding, respectively                                                  28,046                      28,021
   Additional paid in capital                                                4,734,643                   4,725,293
   Accumulated deficit                                                        (479,589)                 (1,280,916)
                                                                             ---------                  ----------
Total shareholders' equity                                                   4,295,947                   3,485,245
                                                                            ----------                  ----------
Total liabilities and shareholders' equity                                  $5,583,959                  $4,981,712
                                                                            ==========                  ==========

See accompanying notes.

Note:The  condensed  Consolidated  Balance  Sheet at December  31, 1997 has been
   derived from the audited financial statements at that date.


</TABLE>
                                             

<PAGE>



                                              Tremont Advisers, Inc.

                                    Condensed Consolidated Statements of Income
                                                    (Unaudited)
<TABLE>
<S>                                       <C>                <C>                      <C>             <C>   

                                           Six months ended                      Three months ended
                                                June 30                                June 30
                                      1998                  1997                 1998                1997
                                 ------------------------------------   ---------------------------------

Revenues
Consulting fees                     $4,336,129         $2,316,269            $2,335,369        $1,207,807
Performance fees                       316,488            177,941               280,606            76,387
Commissions                            218,209            122,244                97,767            83,583
                                      --------           --------               --------          -------
Total revenues                       4,870,826          2,616,454             2,713,742         1,367,777

Expenses
Compensation                         1,793,357          1,420,269               936,109           699,885
General and administrative           1,155,609            569,718               609,082           311,585
Consulting                             660,941            277,913               344,892           140,120
Depreciation and amortization           82,459             54,492                41,968            27,811
                                   -----------            -------               --------          -------
Total expenses                       3,692,366          2,322,392             1,932,051         1,179,401
                                    ----------         ----------            ----------        ----------
                                     1,178,460            294,062               781,691           188,376

Equity in earnings of limited
  partnerships, net                    151,468             91,675                73,874            53,571
Loss from operations of
  joint ventures, net                 (135,160)           (40,048)             (108,296)          (13,187)
Other income, net                       15,741             16,550                 7,574             9,931
                                       -------            -------                ------            ------



Income before income taxes           1,210,509             362,239              754,843           238,691
Provision for income taxes             409,182              69,600              222,359            51,850
                                      --------             -------             ---------          -------
Net income                           $ 801,327           $ 292,639            $ 532,484         $ 186,841
                                     =========           =========            ==========        =========

Net income per Common Share          $    0.20              $ 0.08               $ 0.13            $ 0.05
                                         =====              ======               ======            ======

Net income per Common Share
assuming dilution                        $ 0.19             $ 0.07                $ 0.12           $ 0.05
                                         ======             ======                ======           ======


</TABLE>


See accompanying notes.



                                                   

<PAGE>



                                              Tremont Advisers, Inc.

                     Condensed Consolidated Statements of Cash Flows
                                       (Unaudited)

<TABLE>

<S>                                                                                <C>              <C>
 
                                                                                     Six months ended
                                                                                         June 30
                                                                                    1998            1997
                                                                             --------------------------------

Operating Activities
Net income                                                                     $801,327          $292,639
Adjustments to reconcile net income
  to cash provided by operating activities:
  Depreciation and amortization                                                  82,459            54,492
  Equity earnings of limited partnerships                                      (151,468)          (91,675)
  Loss from operations of joint ventures                                        135,160            40,048
  Loss from other investments                                                     7,269               ---
  Deferred income taxes                                                          70,071               ---
  Changes in operating assets and liabilities:
      Accounts receivable, net                                                 (485,054)          321,621
      Receivable from officer                                                   200,000               ---
      Prepaid expenses and other                                                 14,997           (99,581)
      Accounts payable                                                          (12,693)           13,760
      Accrued expenses                                                         (282,513)         (513,812)
      Income taxes, net                                                          16,680            56,814
      Deferred revenue                                                              ---            28,334
                                                                                   -----          -------
Net cash provided by operating activities                                       396,235           102,640

Investing activities
Purchase of fixed assets                                                        (46,197)          (58,460)
Investments in limited partnerships                                            (105,000)         (135,000)
Investment in joint ventures                                                   (161,000)             (209)
Investment in other investments                                                     ---              (100)
Proceeds from sale of other investments                                             ---            84,000
                                                                                   -----          -------
Net cash used by investing activities                                          (312,197)         (109,769)

Financing Activities
Exercise of Class B Common Stock options                                          9,375               ---
                                                                                 ------              ----
Net cash provided by financing activities                                         9,375               ---

Net increase (decrease) in cash and cash equivalents                             93,413            (7,129)
Cash and cash equivalents at beginning of period                                820,801           551,710
                                                                               --------          --------
Cash and cash equivalents at end of period                                     $914,214          $544,581
                                                                              =========         =========

See accompanying notes.

</TABLE>

                                            

<PAGE>



                            Tremont Advisers, Inc.

         Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE A - Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-QSB and Item 310(b)
of Regulation S-B.  Accordingly,  they do not include all of the information and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements. In the opinion of management,  all adjustments (consisting
of  normal  recurring  accruals)  necessary  for a fair  presentation  have been
included. Operating results for the six and three months ended June 30, 1998 are
not  necessarily  indicative  of the results  that may be expected  for the year
ending  December 31, 1998. For further  information,  refer to the  consolidated
financial  statements  and footnotes  thereto  included in the Company's  Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1997.

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from such estimates.

Net Income per Common Share:  Basic  earnings per share is based on the weighted
average number of shares of Common Stock outstanding during the period.  Diluted
earnings per share is based on the weighted average number of shares outstanding
during the period adjusted for the effects of dilutive securities.

Concentrations  of  Credit  Risk:  The  Company's  accounts  receivable  are not
concentrated  in any specific  geographic  region,  but are  concentrated in the
investment  industry.  At June 30, 1998, the Company had accounts  receivable of
$340,998  from  Starvest  Funds,  Ltd. and $265,017  from The Broad Market Prime
Fund,  L.P.,  respectively.  Although  the  Company's  exposure  to credit  risk
associated  with  nonpayment by customers is affected by  conditions  within the
investment  industry,  no  other  customer  exceeded  10% of the  Company's  net
receivables at June 30, 1998.

Income Taxes:  The provision for income taxes  includes  federal and state taxes
currently  payable and those deferred because of temporary  differences  between
the carrying amounts of assets and liabilities for financial  reporting purposes
and the amounts  used for income tax  purposes.  The income tax  provision  also
gives effect to permanent  differences  between  financial  and taxable  income,
resulting  in a lower  effective  tax rate than the  statutory  income tax rate.
Deferred  income  taxes  were not  provided  on  certain  undistributed  foreign
earnings  ($200,000 at June 30, 1998 ) of Tremont (Bermuda) Limited because such
undistributed  earnings are expected to be reinvested  indefinitely overseas. If
these amounts were not considered  permanently  reinvested,  additional deferred
taxes of approximately  $68,000 would have been provided.  A valuation allowance
is recorded,  based on available  evidence  when it is more likely than not that
some portion or all of the deferred tax assets will not be realized.



                                                  

<PAGE>



NOTE B - Investments in Limited Partnerships

At June 30,  1998  and  December  31,  1997,  Tremont  Partners  Inc.'s  ("TPI")
investments  in The Broad  Market  Fund,  L.P.  were  $756,046  and $688,592 and
represented  .42% and .51% of the fund's net  assets,  respectively.  Summarized
unaudited financial information of The Broad Market Fund, L.P. is as follows:



                                   June 30, 1998           December 31, 1997
                                  -------------           -----------------
Total assets                         $179,031,012             $162,511,390
Total liabilities                         205,010               28,567,596

                                           Six months ended June 30
                                         1998                   1997
                                         -----------------------------
Net investment income                   $13,023,476        $1,156,111
Net realized and unrealized
 gain on investments                      1,472,081         8,574,940
                                         ----------        ----------
Net income                              $14,495,557        $9,731,051
                                        ===========        ==========


At June 30, 1998, TPI's  investments in Meridian  Horizon Fund,  L.P.,  GamTree,
L.P., The F.W.  Thompson Fund,  L.P., and The Broad Market Prime Fund, L.P. were
$358,222,  $195,810, $115,174 and $52,704,  respectively.  At December 31, 1997,
TPI's  investments  in Meridian  Horizon  Fund,  L.P.,  GamTree,  L.P,  The F.W.
Thompson  Fund,  L.P.  and The Broad  Market  Prime Fund,  L.P.  were  $299,483,
$186,717, $46,695 and $0, respectively.  Effective July 1, 1998, TPI resigned as
a Co-General  Partner to Meridian  Horizon Fund, L.P. The aggregated  summarized
unaudited  financial  information of these  entities,  as reported by the Funds'
underlying investment managers, is as follows:


                                   June 30, 1998           December 31, 1997
                                   -------------           -----------------

Total assets                        $410,756,961             $249,504,158
Total liabilities                     83,609,979               60,805,159

                                           Six months ended June 30
                                         1998                   1997
                                        ---------------------------

Net investment loss                    $(3,285,015)        $( 633,570)
Net realized and unrealized gain
 on investments                         35,312,575          6,016,979
                                       -----------         ----------
 Net income                            $32,027,560        $ 5,383,409
                                       ===========        ===========


NOTE C - Accrued Expenses

Accrued expenses consist of the following:
                                         June 30, 1998      December 31, 1997
                                          (Unaudited)           (Audited)

Professional and consulting fees        $ 475,396             $ 741,105
Compensation                              274,962               200,000
Note payable                               63,882                87,840
Employee benefit plan                       ---                 46,566
Other                                      15,981                37,223
                                          -------               -------
                                        $ 830,221             $1,112,734
                                        =========             ==========


                                                   

<PAGE>



NOTE D - Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per
share:
<TABLE>
          <S>                                                <C>                                     <C>   

                                                      Six months ended                       Three months ended
                                                           June 30                               June 30
                                                  1998                  1997            1998                   1997
                                                  --------------------------            ---------------------------

Numerator:

   Net Income - numerator for
   basic and dilutive earnings
   per share (income available
  to common shareholders)                         $801,327          $292,639             $532,484        $186,841

Denominator:

   Denominator for basic
   earnings per share - weighted
   average shares                                4,087,521         3,884,457            4,088,220       3,884,457

Effect of dilutive securities:

   Employee stock options                          240,278           113,407              273,363         128,847

   Denominator for diluted
   earnings per share; adjusted
   weighted-average shares and
   assumed conversions                           4,327,799         3,997,864            4,360,884       4,217,067

Basic earnings per share                            $ 0.20            $ 0.08               $ 0.13          $ 0.05

Diluted earnings per share                          $ 0.19            $ 0.07               $ 0.12          $ 0.05

</TABLE>

NOTE E - Contingencies

The Company is being sued by a former  employee  for alleged  breach of contract
and defamation.  The Company  believes that the suit is without merit;  however,
should the  plaintiff  prevail the Company  believes  that it is likely that the
damages will not be material to the Company's assets or operations.

NOTE F - Subsequent Events

On July 13, 1998 the  Company,  with a joint  venture  partner,  formed  Tremont
Investment Management,  Inc. ("TIMI").  TIMI, which is 65% owned by the Company,
has  applied  for  registration  with the Ontario  Securities  Commission  as an
adviser in the categories of investment  counsel and portfolio  manager and as a
limited market dealer under the Securities Act (Ontario).





                                                 

<PAGE>


The  Company's  Board of  Directors  recently  adopted,  through  a written
consent  of a  majority  of  shareholders,  to  amend  its  Certificate  of
Incorporation  to  increase  the  authorized  number of shares of Class B Common
Stock,   $.01  par  value,   from  five  million   (5,000,000)  to  ten  million
(10,000,000).  Also included in this amendment is the entitlement of each holder
of Class A Common  Stock,  $.01 par value,  to convert his or her shares into an
equivalent number of Class B Common Stock, $.01 par value.


Item 2.Management's Discussion and Analysis

Tremont  Advisers,  Inc.'s (the "Company")  revenues are derived from consulting
and specialized investment services provided to institutional and other clients,
as well as management fees from certain  investment  funds under its management.
Consulting  fees  are  generally  a  function  of the  amount  of  assets  under
management and the percentage fees charged to clients. Management fees are based
on a  percentage  of the  assets of the fund and are  usually  paid on a monthly
basis.  The Company also receives  asset-based  fees for  investments  placed by
Tremont  (Bermuda) Limited ("TBL"),  its wholly-owned  offshore  subsidiary,  in
certain offshore mutual funds.  The Company provides other consulting  services,
generally  on a fixed  fee  basis,  whether  as annual  retainer  fees or single
project fees. The Company's principal operating expenses consist of its costs of
personnel and independent consultants.  It is management's intention to continue
the  Company's  focus on  launching  new  products  and taking  advantage of its
growing world-wide relationships to expand its operations.

Consulting  fees for the six months ended June 30, 1998  increased by $2,019,860
or  approximately  87.2% as compared to the six months ended June 30, 1997.  The
increases  in revenue  were  primarily  as a result of  increases  in the assets
managed,  increases in the value of the assets within the respective  investment
vehicles  and  from  new  clients.  At  the  Company's   wholly-owned   domestic
subsidiary,  Tremont  Partners,  Inc.  ("TPI"),  consulting  fees increased from
$1,449,820  for the six months ended June 30, 1997 to  approximately  $2,932,624
for the six  months  ended June 30,  1998.  The  increase  is  primarily  due to
increases in revenues  from the  following  related  entities:  The Broad Market
Prime Fund, L.P.  ($666,149),  Meridian Horizon Fund, L.P.  ($281,377),  and The
Broad Market Fund, L.P. ($214,694).  Consulting fees also increased domestically
as a result of Tremont Securities,  Inc. ("TSI") realizing  consulting fees from
the sale of limited  partnership  interests.  These fees amounted to $52,275 for
the six months ended June 30, 1998 and did not occur during the six months ended
June 30, 1997.  TBL's consulting fees increased from $866,449 for the six months
ended June 30, 1997 to  approximately  $1,351,230  for the six months ended June
30, 1998.  The increase is primarily  due to increases in revenues  from Kingate
Global Fund Class B Shares ($204,919), as well as from several new clients.

Consulting  fees for the  Company  for the  three  months  ended  June 30,  1998
increased by $1,127,562,  or approximately 93.4% as compared to the three months
ended June 30, 1997.  The  increases in revenues  were  primarily as a result of
increases in the assets managed, increases in the value of the assets within the
respective  investment  vehicles and a larger client base. TPI's consulting fees
increased   from   $762,482  for  the  three  months  ended  June  30,  1997  to
approximately  $1,556,752 for the three months ended June 30, 1998. The increase
was  primarily  due to increases  in revenues  from The Broad Market Prime Fund,
L.P. ($378,853),  Meridian Horizon Fund, L.P. ($149,413), The Broad Market Fund,
L.P.  ($100,491) and Chrysler  Minority Equity Trust ($93,994).  Consulting fees
also increased  domestically  as a result of TSI realizing  consulting fees from
the sale of limited  partnership  interests.  These fees amounted to $44,085 for
the three  months  ended June 30, 1998 and did not occur during the three months
ended June 30, 1997. TBL's consulting fees increased from $445,325 for the three
months ended June 30, 1997 to approximately  $734,530 for the three months ended



                                                  

<PAGE>


June 30, 1998. The increase was primarily due to increases in revenues from
Kingate  Global  Fund Class B Shares  ($110,947),  as well as from  several  new
clients.

Performance  fees for the six and three months ended June 30, 1998  increased by
$138,547 or 77.9% and $204,219 or 267.3%,  respectively,  as compared to the six
and three  months  ended  June 30,  1997,  primarily  as a result of  underlying
investment vehicles outperforming their established benchmarks.

Commissions   received  by  TSI,  the  Company's   wholly-owned   broker  dealer
subsidiary,  increased  by $95,965 or 78.5% and $14,184 or 17.0%,  respectively,
for the six and three months ended June 30, 1998 compared to similar  periods in
1997. These increases are primarily as a result of increased trading  activities
by TSI's clients.

Management  expects that for the  remainder of 1998 the Company will become less
dependent on a small  number of large  clients as the Company is  continuing  to
develop relationships with a variety of different entities.  The Company is also
utilizing  these  relationships  to  create  diversified  ways  to  package  and
distribute  its  subsidiaries'  proprietary  products.  In addition,  management
expects  performance  fee revenue to increase  during periods of positive market
conditions,  but  management  cannot predict with any accuracy  performance  fee
income due to changing market conditions and other outside factors.

Compensation  expense increased for the six and three months ended June 30, 1998
by $373,088 or 26.3% and $236,224 or 33.8%, respectively, as compared to the six
and three  months ended June 30, 1997,  as a result of the  Company's  continued
efforts to attract and retain qualified employees.  These efforts resulted in an
increase in the number of  employees  to 31 at June 30, 1998 from 28 at June 30,
1997.  Compensation  expense also increased due to salary  increases for certain
employees  that became  effective  January 1, 1998 and as a result of  increased
health care costs associated with the increase in the number of employees.

General   and    administrative    expenses    consist    primarily   of   rent,
telecommunications,  travel  and  entertainment,  professional  fees  and  other
related expenses.  General and  administrative  expenses  increased  $585,891 or
102.8% and $297,497 or 95.5%,  respectively,  for the six and three months ended
June 30, 1998, as compared to similar  periods in 1997.  The increase in general
and  administrative  expenses  was  primarily  due to the costs  related  to the
Company's  continued  expansion  to service  its growth,  including  moving to a
larger  office  facility in  September,  1997. It was also due to an increase in
professional  fees and other related  costs of launching  new business  ventures
which were and are currently in the start-up phase.

Consulting  expenses  increased  $383,028  or 137.8%  and  $204,772  or  146.1%,
respectively,  for the six and three months ended June 30, 1998,  as compared to
the six and three  months  ended  June 30,  1997,  primarily  as a result of the
increase  in the number of clients and an  increase  in  revenues  from  clients
subject to the Company's revenue sharing arrangements. For example, TSI shares a
certain   percentage  of  the  commissions   earned  by  it  with  the  clearing
broker-dealer  providing it with securities clearing services.  TPI and TBL also
have revenue sharing arrangements applicable to certain clients.

Depreciation and amortization  increased  $27,967 or 51.3% and $14,157 or 50.9%,
respectively,  for the six and three  months  ending June 30,  1998  compared to
similar  periods in 1997.  The  increase  resulted  from the  purchases of fixed
assets after June 30, 1997.  These purchases  included  computer  upgrades,  new
software and the  expansion of the computer  network,  as well as furniture  and



                                                

<PAGE>



fixtures for the Company's new executive offices.  The Company made capital
expenditures of $46,197 during the six months ended June 30, 1998.

Equity in earnings from investments in limited partnerships increased $59,793 or
65.2% and $20,303 or 37.9%,  respectively,  for the six and three  months  ended
June 30, 1998,  compared to similar periods in 1997. This increase was primarily
due to increased investment performance compared to similar periods in 1997.

Cash provided by operations  was $396,235 for the six months ended June 30, 1998
as compared to $102,640  for the six months  ended June 30,  1997.  The $508,688
increase in net income was offset by changes in working capital accounts.  These
changes  include an increase in  accounts  receivable  and a decrease in accrued
expenses,  offset by a decrease in a receivable from officer.  The positive cash
flow  provided  by  operating  activities  was offset by cash used by  investing
activities of $312,197 for the six months ended June 30, 1998.

Profitability  is dependent  on the ability of the Company to maintain  existing
client  relationships,  several of which  currently  account  for a  significant
portion of the Company's  revenues,  to increase assets under management for its
clients, and to market its services to new accounts.

The Company  believes it has adequate  capital  resources and working capital to
bring to market those products  currently in the  developmental  stage, and that
the revenue  stream  from  these,  as well as from  existing  products,  will be
sufficient to support future growth.  The Company has no material  short-term or
long-term debt obligations.

The Company owns options to purchase 8,000 shares of a privately-held investment
adviser  specializing in 401(k) investment  allocation advice over the Internet.
The  options  were  granted at $10 per share and have vested or will vest 25% on
January  1, 1996;  25% in equal  installments  at the end of each month  between
January 1, 1997 and December 31, 1997; and 50% in equal  installments at the end
of each month between  January 1, 1998 and December 31, 1998. The options have a
five year term and were valued at zero by the Company at June 30, 1998.

The Company  owns 30,000  shares of common stock of a  privately-held  financial
services  company  formed in 1996.  The shares were received by the Company as a
result of an employee's participation as a board member of such company. At June
30, 1998 the shares of common stock were valued at zero.

The Company, with a joint venture partner, formed Tremont Investment Management,
Inc. ("TIMI"). TIMI, 65% owned by the Company, has applied for registration with
the Ontario Securities  Commission as an adviser in the categories of investment
counsel  and  portfolio  manager  and  as a  limited  market  dealer  under  the
Securities Act (Ontario).

The Company has received the necessary  shareholder consent to an amendment to
its Certificate of Incorporation  increasing the authorized  number of shares of
Class B Common  Stock,  $.01 par value,  from five  million  (5,000,000)  to ten
million  (10,000,000)  shares.  This  amendment  also grants  holders of Class A
Common  Stock,  $.01 par value,  the right to convert their shares into an equal
number of shares of Class B Common Stock.



                                                  

<PAGE>


The  Company  is being  sued by a former  employee  for  alleged  breach of
contract  and  defamation.  The Company  believes  that the suit is without
merit;  however,  should the plaintiff  prevail the Company  believes that it is
likely  that the  damages  will  not be  material  to the  Company's  assets  or
operations.

     The Year 2000 issue is the result of computer  programs being written using
two digits  rather than four to  determine  the  applicable  year.  Any computer
programs  that have time  sensitive  software may recognize a date using "00" as
the year 1900 rather than the year 2000.  This could result in a system  failure
or  miscalculation  causing  significant  disruptions of operations,  including,
among other things, a temporary  inability to process  transactions or engage in
similar normal business  activities.  Based on a recent assessment,  the Company
determined all but one of its significant computer systems are currently enabled
for year 2000  entries and the Company  believes  such system will be  compliant
within the second  quarter of 1999. The cost of the assessment was immaterial to
the Company and the Company  believes  that the cost of its  compliance actions
will also be immaterial to the Company. However, the Company could be adversely
affected if the computer systems used by the Company's  service providers do not
properly process and calculate date-related  information and data from and after
January 1, 2000.  The Company is  currently  in  communication  with these other
companies to determine if there is reasonable cause for concern.

Certain  statements  in this  Management's  Discussion  and Analysis  constitute
"forward  looking  statements"  within  the  meaning of the  Private  Securities
Litigation Reform Act of 1995. Such forward looking statements involve known and
unknown  risks,  uncertainties  and other  factors  which  may cause the  actual
results,  performance, or achievements of the Company to be materially different
from any future results,  performance,  or achievements  expressed or implied by
such forward looking statements.  These forward looking statements were based on
various factors and were derived utilizing  numerous  important  assumptions and
other factors that could cause actual results to differ materially from those in
the forward looking statements, including, but not limited to: uncertainty as to
the Company's  future  profitability  and the  Company's  ability to develop and
implement   operational   and  financial   systems  to  manage  rapidly  growing
operations,  competition in the Company's existing and potential future lines of
business,  and other factors. Other factors and assumptions not identified above
were also involved in the derivation of these forward  looking  statements,  and
the failure of such other assumptions to be realized,  as well as other factors,
may also cause actual results to differ  materially  from those  projected.  The
Company  assumes no  obligation to update these  forward  looking  statements to
reflect  actual  results,  changes in  assumptions  or changes in other  factors
affecting such forward looking statements.

                                                

<PAGE>


       PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

The Company has been sued by a former  employee  for alleged  breach of contract
and defamation.  The Company  believes that the suit is without merit;  however,
should the  plaintiff  prevail the Company  believes  that it is likely that the
damages will not be material to the Company's assets or operations.

Item 4.  Submission of Matters to a Vote of Security Holders

At the  Company's  Annual  Meeting of  Stockholders  held on June 11, 1998,  the
stockholders  elected the following to serve as directors  until the next Annual
Meeting  of  Stockholders  and  until  their  successors  are duly  elected  and
qualified.

                                    For             Against
 Sandra L. Manzke               6,557,130           8,172
 Robert I. Schulman             6,557,130           8,172
 John L. Keeley, Jr.            6,557,130           8,172
 Jimmy L. Thomas                6,557,130           8,172
 Alan A. Rhein                  6,557,130           8,172
 Richard E. O'Brien             6,557,130           8,172

The  stockholders  also  voted to ratify the  selection  of Ernst & Young LLP to
serve as the  Company's  auditors for the fiscal year ending  December 31, 1998.
The vote was as follows:

                 For             Against          Abstain
              6,565,302             0                0


Item 6.  Exhibits and Reports on Form 8-K

There were no reports on Form 8-K filed during the quarter ended June 30, 1998.
                                           
<PAGE>



Signature

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.


                                            Tremont Advisers, Inc.


Date:  August 7, 1998                       /s/ Stephen T. Clayton
                                            Stephen T. Clayton
                                            Chief Financial Officer
                                            (Duly authorized Officer and
                                            Principal Financial and Accounting
                                            Officer)